Redwood Materials raises another $350M to power up its energy storage business

Redwood Materials, a company specializing in battery recycling and cathode production, has successfully secured $350 million in funding to enhance its energy storage initiatives, aimed at supporting the burgeoning demand from AI data centers. This Series E funding round, spearheaded by venture capital firm Eclipse, also welcomed a strategic investment from NVentures, the venture capital branch of Nvidia. While the specific valuation of Redwood was not disclosed, sources close to the funding indicated it has risen to approximately $6 billion, marking a significant increase from its prior valuation. The newly acquired funds are earmarked for expanding Redwood's energy storage capabilities, as well as boosting its refining and materials production operations. Founded in 2017 by former Tesla CTO JB Straubel, Redwood Materials initially focused on establishing a circular supply chain for batteries by recycling scrap from battery cell manufacturing and consumer electronics, including mobile phone and laptop batteries. The company has been processing discarded batteries to extract valuable materials such as cobalt, nickel, and lithium, which are typically obtained through mining. Redwood’s clientele includes major players like Panasonic, GM, and Toyota. In addition to its recycling efforts, Redwood has recently ventured into cathode production and launched an energy storage branch, known as Redwood Energy. This new division aims to utilize the thousands of retired electric vehicle (EV) batteries it collects to provide power to corporations. Redwood Energy primarily targets AI data centers and other large-scale industrial facilities. The company is currently sitting on a substantial inventory of EV batteries that still have significant usable life, making them ideal for energy storage solutions. These batteries are integrated with renewable energy sources, such as wind and solar, to create off-grid systems that supply power to AI data centers and industrial sites. Moreover, Redwood has the flexibility to connect these systems to the electrical grid, and the EV batteries can also be linked to natural gas turbines or future nuclear energy generators for extensive energy storage. With a robust supply chain, Redwood recovers over 70% of all used or discarded battery packs in North America, and not all are recycled immediately. As of June, the company had amassed over 1 gigawatt-hour of batteries available for energy storage. By 2028, Redwood aims to implement 20 gigawatt-hours of grid-scale storage, positioning itself to become the leading repurposer of used EV battery packs.